Executive accountability systems and the financial investments of state-owned enterprises in China

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2025-02-10 DOI:10.1016/j.pacfin.2025.102702

Guoqiang Hu , Wenxiang Sun , Yuanzheng Xu , Hong-an Mao

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Abstract

This study examines the impact of executive accountability systems on the financial investments of state-owned enterprises (SOEs). Utilizing the staggered regional implementation of the Accountability System for Irregular Operations and Investments (ASIOI) in Chinese SOEs as an exogenous shock and a difference-in-differences design, we observe a significant reduction in SOEs' financial investments after the implementation of the ASIOI. Further analysis reveals that mitigating managerial myopia and strengthening internal control are potential mechanisms through which the ASIOI affects SOEs' financial investments. Cross-sectional tests show that the ASIOI's effects are more pronounced in SOEs with more intense market competition, shorter chairperson tenures, lower financing constraints, and higher agency costs. Moreover, the ASIOI reduces over-investment and speculative investment in financial assets while enhancing core business performance. Overall, our findings highlight the positive impact of executive accountability systems on corporate financial investments and the implications of improving resource allocation efficiency in SOEs.

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来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.